GoMechanic buyout: Gurugram court restrains car care solutions company from alienating its shares

A Gurugram court passed an order on Thursday restraining car care solutions company GoMechanic from alienating its assets or creating any encumbrances on them after lender Equentia Financial Services Private Limited (CredAble) filed a petition under the Arbitration Act..It was Equentia’s case that GoMechanic was an ‘obligor’ to a facility agreement worth ₹20 crore provided to one of its group companies named Parcit Auto Crazy Private Limited but recent news reports suggested that GoMechanic was in talks with its other creditors regarding a sale of the company..Rajeev Goyal, Presiding Judge, Commercial Court Gurugram, said that the stay will remain in force till the next date of hearing which is scheduled on February 27..Equnetia submitted that on July 8, 2022 it executed facility agreements to provide ₹20 crores as working capital facilities to Parcit Auto Crazy Private Limited.The Court was told that the agreements were executed based on the condition that GoMechanic would act as an ‘Obligor’ to ensure the fulfillment of the obligations.Equentia stated that GoMechanic and Parcit are part of one group and their businesses are intertwined and interconnected.“As Respondent No. 2 (Parcit) was deeply and financially connected with Respondent No. 1 (Go Mechanic), the Petitioner (Equentia) insisted that Respondent No. 1 become a party to the loan facility agreement in the capacity of an ‘Obligor’. In fact, in order to assuage the concerns of the Petitioner regarding sanctioning the loans, the Respondent No. 1 also agreed to become a corporate guarantor to the facility agreements,” the lender said. However, on January 18, 2023, news reports and a LinkedIn post written by one of the founders of Go Mechanic revealed that Go Mechanic has been falsely reporting its financials and inflating its revenue figures.Based on this, Equentia sought to recall the loan and invoke the bank guarantees but the same were not responded to and the outstanding obligations have not been cleared, it was argued.“It is submitted that under the terms of the Facility Agreements alienation of assets or shares or creating of any encumbrance either by Respondent No. 1 or Respondent No. 2 had to be approved by the Petitioner, prior to any such alienation. However, Respondents deliberately are not responding to the Petitioner’s notices and ignoring the negative covenants contained in the Facility Agreements. Such illegal actions of the Respondents are likely to cause irreparable harm to the Petitioner and it would no longer be able to recover its outstanding obligations,” the plea stated. .Equentia was represented by Trilegal’s Anuj Berry, Sourabh Rath and Prerna Acharya. Advocate MK Dang argued the matter..[Read Order]